“Sine Die” adjournment was set for tomorrow, Saturday, March 12, but they are headed into overtime as budget negotiations drag out. All non-budget work should be done by tomorrow, with the House and Senate hopefully returning next week for a final vote on the budget.
We are pleased to report another successful session for Beer Distributors, which we could not have done without the active participation of so many of you. To everyone that showed up in Richmond, did a warehouse tour before session, contacted their legislators, answered questions from VBWA staff about how a bill could impact your business or otherwise supported our efforts, thank you! You are the secret to our continued success.
Listed below is a summary the key legislation from the 2022 General Assembly Session. Should you want more details on a specific bill, you can go directly to the bill summary, bill history and bill text by clicking the bill number below. Please let us know if you have questions about the bills listed or want to discuss anything else.
ABC Privatization
HB119 (March) & HB328 (Freitas): With Republicans regaining control of the House, the ABC “Privatization” issue resurfaced as an item for discussion. The biggest threat was from Del. Freitas’ HB328, which would have kept the Commonwealth in the distribution business for spirits, but privatized the retail end. Del. March introduced a broader bill that would have prohibited the state from offering a service that “competes with the private sector”, which we believe would have included ABC. The VBWA strongly opposed both bills. The Freitas bill was defeated in the subcommittee on a 8-0 vote. Anticipating a similar result, Del. March “struck” her bill, which effectively ended the privatization discussion for the 2022 session. We should expect the issue to return in 2023 and need to remind legislators why privatization is a bad idea.
Virginia Wine Distribution Company Study
HB1336 (Robinson): The Virginia Craft Brewers Guild attempted to get legislation introduced that would have allowed craft breweries to sell their beer through the Virginia Wine Distribution Company (VWDC). The VWDC is a program run by the Department of Agriculture that allows farm wineries access to the market without going through a traditional wine distributor. It has a Board that consists of wineries and wine distributors, limits on the volume and operates at a deficit, so requires an annual state appropriation. It’s run out of the Department of Agriculture because it’s a way to support wineries, which are agricultural businesses. While the VBWA has long committed to having a conversation about including beer in the VWDC, we did not support the proposed legislation or approach that the Guild was attempting to take. What we did support was legislation that requires the Department of Agriculture to study if and how beer should be included in the program, as well as other aspects of the craft beer market. As introduced, the VBWA supported the alternative bill that passed the General Assembly and looks forward to working on the issue over the summer.
DOLI Emergency COVID Regulations
The Governor sent down budget amendments that would repeal the permanent DOLI COVID Regulations while the Administration went through the Administrative Process Act (APA) to repeal them. As a reminder, the Administration has started the APA process to repeal the regulations and DOLI’s board voted not to enforce them during the repeal process. The APA can take up to 2 years, so the Administration wanted them repealed by the legislature as soon as possible so that there could not be litigation attempting to enforce the regulations during the regulatory repeal process. Working with our coalition, the VBWA lobbied for the language amendments. While the amendment did not make it into the Senate Finance Committee’s proposed budget, Sen. McDougle put forward the amendment on the floor when the budget came up for a vote with the support of Sen. Chap Petersen. Knowing the votes were on the floor to adopt the amendment, Senate Finance Chair Janet Howell endorsed the floor amendment and it was adopted unanimously. The COVID DOLI Regulations will now be fully repealed once the budget is signed into law by the Governor.
Bottle Bill/Recycling
HB647 (Carr), HB709 (Keam), HB826 (Hope) & HB918 (Lopez): As expected, we saw a bottle bill introduced. In addition to the bottle bill, there were three bills that would establish the Packaging Stewardship Program, administered by DEQ. Under the Program, a producer that sells products with packaging materials pays a fee to DEQ based on the amount of packaging used and whether or not it is easily recyclable. A producer may establish an alternative collection program to offset some or all of the fees. The fees would be paid into a newly created “Packaging Stewardship Fund”, and used to reimburse participating localities for expenses related to recycling, invest in recycling infrastructure and education, and pay administrative costs related to the Program. While the focus is on having the manufacturer pay the new fees, we’re naive to think that it wouldn’t ultimately hit your bottom line. The VBWA was part of a broad coalition of business interests to oppose the bills, but the advocates promised to return next year.
Cross-Tier Employment
HB464 (Bulova): As most in the service industry, craft brewers are having difficulty finding and retaining quality employees. They claim the ABC regulation that prohibits a retailer from employing a brewery employee if that retail account sells that brewery’s beer is complicating their efforts to find employees and asked Del. Bulova to introduce legislation overturning the long-standing regulation. The VBWA, VWWA, ABI and MolsonCoors opposed the bill with the various retailer groups being neutral. Realizing that there was no consensus, Del. Bulova asked that his bill be “tabled” this session. As a way to address the issue, ABC has agreed to review the existing regulations related to hiring this coming Summer for possible updates. The VBWA will be part of the regulatory review, so distributors will be engaged in the process. ABC started the regulatory review process this week, so standby for more reports as we work on the issue.
Craft Distilleries
HB300 (Freitas), HB387 (Freitas), SB65 (Ruff): There were several bills proposed by craft distillers that were of concern. The most troublesome bills would have allowed direct shipments by in-state distilleries, because it could have exposed the Commonwealth to “Commerce Clause ” litigation from out-of-state distilleries and put the “Control State” model at risk. While both bills were defeated this session, the issue is unlikely to go away until ABC improves it’s direct-to-consumers delivery system for craft distilleries.
Dram Shop
HB984 (Runion), SB230 (Hanger) & SB555 (Obenshain): Several “Dram Shop” bills were introduced as a result of a high-profile DUI incident in the Valley. Dram Shop is a legal principle that exists in a majority of states across the nation that assigns civil liability to a retailer for actions taken by their patrons. That liability does not extend to the wholesale or manufacturing tier except in instances where they have retail privileges. After discussions with the Board and full membership, the VBWA was neutral on the bills as long as liability did not extend to the wholesaler. The legacy breweries took a similar position. While all the bills were defeated this year, we should expect the issue to return and will continue to monitor.
Cocktails-to-Go
HB426 (Bulova) & SB254 (Bell): As COVID raged and restaurants were shut down, Gov. Northam loosened restrictions on “alcohol-to-go” for spirits by Executive Order to offer retailers a lifeline. The 2021 General Assembly allowed for that policy to continue on a temporary basis when the Executive Order expired and agreed to study making the policy permanent. The VBWA was part of the workgroup that studied the issue over the past year. That workgroup proposed extending the current “cocktails-to-go” policy for two more years so we can fully evaluate what the unintended consequences the policy may have on public health. Both bills passed both chambers with broad support and are on their way to the Governor for his approval.
New ABC Licensing Privileges
HB455 (Knight) & SB519 (Lucas): Casinos are now legal in Virginia and preparing to open in the months ahead. As such, they’ve been working with the broader ABC community to develop a customized ABC license that makes sense for how they operate. Del. Knight and Sen. Lucas have led those efforts and introduced bills establishing a casino ABC license, which the VBWA supports. The bills passed both chambers with broad support and are on their way to the Governor for his approval.
Food Ratio
SB619 (Cosgrove): It’s been a few years, but the food ratio issue has returned. The bill was “pulled” by the patron in Senate Rehab this morning; however, expect to return in the future.
Marijuana
There were over a dozen bills introduced impacting how the Commonwealth will move forward with cannabis sales. None of the House bills made it out of committee and the Senate rallied behind a bill that would allow cannabis pharmaceutical operators to sell to the general public starting this year until a more traditional retail structure could be set up to create a “legal” market. Feeling they did not have enough time to work through all of the complex issues, House Republicans ultimately decided to kill the Senate bill for the 2022 Session and allow for time to study the issue over the Summer.
